CA says Telkom's Sh1.5bn debt must be paid before it is sold

The telecom firm is yet to clear licence and frequency fee arrears for 2014/2015 and 2015/2016.

Saturday March 5 2016

Orange Telkom Kenya CEO Vincent Lobry (left) and Chief Marketing and Strategy Officer Vincent Camadro during the unveiling of the dual SIM 3G Firefox OS smartphone on January 22, 2016 in Nairobi. The Communications Authority will block the  firm's sale to equity firm Helios Investment partners if a Sh1.5 billion debt is not cleared. PHOTO | DIANA NGILA | NATION MEDIA GROUP

Orange Telkom Kenya CEO Vincent Lobry (left) and Chief Marketing and Strategy Officer Vincent Camadro during the unveiling of the dual SIM 3G Firefox OS smartphone on January 22, 2016 in Nairobi. The Communications Authority will block the firm's sale to equity firm Helios Investment partners if a Sh1.5 billion debt is not cleared. PHOTO | DIANA NGILA | NATION MEDIA GROUP 

By LILIAN OCHIENG'
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The Communications Authority (CA) will block the sale of Telkom Kenya to equity firm Helios Investment partners if a debt of Sh1.5 billion in licensing fee is not cleared.

CA Director-General Francis Wangusi said the authority has received Orange’s letter requesting transfer of shares to Helios but added that the approval can only be granted if the operator clears its dues. The telecom firm is yet to clear licence and frequency fee arrears for 2014/2015 and 2015/2016.

“We are asking them to pay up this financial year, they have not paid the fee for the last two years,” said Mr Wangusi on Thursday. “Starting July, they will get another invoice for nearly Sh800 million.”

France telecom announced late last year that it would transfer 70 per cent shares in Telkom Kenya to Helios Investment partners.

The clearance of the arrears owed will also determine how soon the purchase of the shares is approved by the CA. The regulator also noted that penalties accruing over the years, such as misuse of frequency and failure to meet set quality standards, will be considered.

BUY ADDITIONAL SHARES

“The finalisation of the transaction remains subject to approval from the relevant authorities,” the France Telecom statement announcing the deal read.

Helios has been in negotiations with the National Treasury over the latter’s acquisition of 10 per cent shares, an addition to the current shareholding at 30 per cent. Under a new agreement, government will have first priority to buy additional shares from France Telkom.

Also critical in ongoing meetings are how to clear debts owed as France Telecom moves out of the market. Safaricom is also a creditor claiming Sh639 million from Telkom Kenya.

(READ: Entry of Helios into telecom sector to benefit customers)

The leading telco began a court injunction to stop the sale of 70 per cent France Telecoms’ stake in Telkom Kenya, unless the amount is cleared. The two however agreed to settle the issue out of court.

Sources privy to the meetings say that the government wants Helios to sign a clause guaranteeing that the Treasury’s shares at Telkom Kenya will not be diluted.

The government also wants an update of the business performance on a quarterly basis.

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